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Consumers have bought more than 11 million internet-connected Vizio televisions since 2010. But according to a complaint filed by the FTC and the New Jersey Attorney General, consumers didn’t know that while they were watching their TVs, Vizio was watching them. The lawsuit challenges the company’s tracking practices and offers insights into how established consumer protection principles apply to smart technology.

Starting in 2014, Vizio made TVs that automatically tracked what consumers were watching and transmitted that data back to its servers. Vizio even retrofitted older models by installing its tracking software remotely. All of this, the FTC and AG allege, was done without clearly telling consumers or getting their consent.

What did Vizio know about what was going on in the privacy of consumers’ homes? On a second-by-second basis, Vizio collected a selection of pixels on the screen that it matched to a database of TV, movie, and commercial content. What’s more, Vizio identified viewing data from cable or broadband service providers, set-top boxes, streaming devices, DVD players, and over-the-air broadcasts. Add it all up and Vizio captured as many as 100 billion data points each day from millions of TVs.

Vizio then turned that mountain of data into cash by selling consumers’ viewing histories to advertisers and others. And let’s be clear: We’re not talking about summary information about national viewing trends. According to the complaint, Vizio got personal. The company provided consumers’ IP addresses to data aggregators, who then matched the address with an individual consumer or household. Vizio’s contracts with third parties prohibited the re-identification of consumers and households by name, but allowed a host of other personal details – for example, sex, age, income, marital status, household size, education, and home ownership. And Vizio permitted these companies to track and target its consumers across devices.

That’s what Vizio was up to behind the screen, but what was the company telling consumers? Not much, according to the complaint.

Vizio put its tracking functionality behind a setting called “Smart Interactivity.” But the FTC and New Jersey AG say that the generic way the company described that feature – for example, “enables program offers and suggestions” – didn’t give consumers the necessary heads-up to know that Vizio was tracking their TV’s every flicker. (Oh, and the “Smart Interactivity” feature didn’t even provide the promised “program offers and suggestions.”)

The complaint alleges that Vizio engaged in unfair trade practices that violated the FTC Act and were unconscionable under New Jersey law. The complaint also alleges that Vizio failed to adequately disclose the nature of its “Smart Interactivity” feature and misled consumers with its generic name and description.

To settle the case, Vizio has agreed to stop unauthorized tracking, to prominently disclose its TV viewing collection practices, and to get consumers’ express consent before collecting and sharing viewing information. In addition, the company must delete most of the data it collected and put a privacy program in place that evaluates Vizio’s practices and its partners. The order also includes a $1.5 million payment to the FTC and an additional civil penalty to New Jersey for a total of $2.2 million.

Here are tips smart companies take from the latest law enforcement action involving smart products, which were also discussed at the FTC’s recent Smart TV workshop.

Explain your data collection practices up front. Tell consumers from the outset about the information you intend to collect. Ditch the tech talk and use easy-to-understand language. Especially when explaining new technologies or data collection people may not expect, transparency can be the key to customer loyalty.

Get consumers’ consent before you collect and share highly specific information about their entertainment preferences. If consumers wouldn’t expect you to be collecting information from them, especially sensitive information, make sure they consent to what you intend to do. The best way to accomplish that is to get their opt-in to the practice – in other words, to express their consent affirmatively.

Make it easy for consumers to exercise options. Would a function called “Smart Interactivity” that “enables program offers and suggestions” clue consumers in that everything they watch is being collected and shared with third parties? We don’t think so. Companies can hardly claim to offer consumers a choice if the tools necessary to exercise that choice are hard to find or hidden behind plain-vanilla descriptors.

Comments

This is outrageous, disgraceful & this crime
should penalize the companies any with restitution to the individuals that were scammed! Why should the FTC receive the fruits of this crime? The people - the victims
Should receive compensation!

I think this for every fine imposed on some company then paid to the federal or state government! Why is it not always treated as a class action suit with some of the funds allocated to determine the impacted people and funds to pay for the disbursement process!

Yes, yes, feds and states need funding too. I'd even be ok if they took 30% off the top of the fine, and in theory with them increasing the fine so that the citizens get full disbursement. Who are the brains behind this racket? Why do we let this happen?

I have 3 of these TV's does that mean you'll break up the fine equally for all owners I mean seriously you let the government collect the fine but we the people who are spied on get nothing but a it won't happen again which you know is nothing but a LIE... Where is the owners law suite for this spying? Class action law suite for the people who've been targeted and used.... ????

Just to clarify, the FTC isn't getting paid either. In this case, the money goes to the U.S. Treasury, not specifically to the FTC. In many case, the FTC does win back money for consumers. For example, in just the past few months, we've returned more than $250 million directly back to consumers as a result of our cases against companies like Herbalife, AT&T, and Lumosity. But in other cases, the cost of printing and mailing individual checks makes refunds not possible. In those cases, the money goes to the U.S. Treasury (not to the FTC).

But money isn't the only result in the Vizio case. The settlement requires Vizio to destroy data the FTC alleges was illegally collected and puts provisions in place so that Vizio has to change its business practices from here on in. We think that's an important step for protecting consumer in the future.

AND...the taxpayers took the risk in hiring attorneys, when the settlement could have been zero. The taxpayers sued and won, the money goes into the treasury to benefit the taxpayers. If any of the "impacted consumers" are not taxpayers, hire an attorney and sue Visio yourself. Expect your damages to be about tree fiddy.

I believe the same thing. Also, why only people in New Jersey receiving compensation? What about everyone else across this Nation? Shouldn't WE get compensated for the intrusion of our Privacy too?calle cashel

Not just your Nation. All Canadian displays are also sending data to about a dozen US IP's.
This when Vizio's website states Smart Interactivity is for US only, and the Smart Interactivity control always says "Switched Off".

The money doesn't go to the FTC. In fact, in most cases, the FTC works to get money back directly to consumers. For example, in just the last four months alone, the FTC has distributed over $250 million to consumers as the result of recent FTC settlements with AT&T, Herbalife, Lumosity, One Technologies, Mercola.com, and others. But in some cases, refunds are just not feasible because the individual check amounts would be too small, especially compared with the cost of printing and mailing the check. Vizio is one of those cases. When refunds aren’t feasible, the money goes to the U.S. Treasury – not to the FTC – to help pay the cost of operating the federal government.

This is one step further about sending data about our lives. Facebook, Twitter and Co. are all at it.
This is not compatible with the "the land of the free". I dislike my data being send anywhere.
So open to misuse.

Bur why does everyone accept this - ok a few protests here and there but nothing changes and the data collection carries on.

My husband & I bought a Vizio TVa couple years ago at Wal-Mark in Sheboygan, Wi 53081. It is still working but our son-in-law gave us a larger one last month as he no longer needed it. When reading about Vizio just now I was wondering what this is all about??? What actions can be taken if any?? Thank you.Sandi Weiskopf

Wow!... This is insane! Vizio robs consumers of their privacy & makes bukhu money on selling that data! Then FTC comes along, sueing Vizio, and takes its cut & leaves end consumers to dust! So FTC gets benefit for not doing its job in first place & Vizio already got huge returns!... Who's there to stop these both beneficiaries extorting consumers?... Vizio or any company should feel encouraged to do this fearlessly 'cause if at all they get caught they only have to provide back minor cut(which is probably pennies to dollars)!... Ideally FTC should be sued also for not appropriately doing its job!...

I will never purchase anything from vizio ever again. This is a free ciuntry and yoy took your freedom too far. All for the great old dollar. Shame on you for spying on the public.
ALL YOU. HAD TO DO IS ASK BEFORE YOU PLANTED. THAT DEVICE.

You are voting with your wallet. Vizio can see you a TV that is cheaper than other brands because they have an alternate revenue stream - your viewing data. If you want your data to remain private, then don't sell it. Buy some other brand. If its more expensive, that's the way it is. If the absolute lowest price is your only criteria, you get what you deserve.

You're assuming that other 'smart TV' manufacturers aren't doing exactly what Vizio is doing. I met someone who worked for NBC and told me that the networks are in on this scheme as well, and are trying to beat the smart TV companies at their own game by hiring programmers to build their own revenue streams.

Because the data Vizio was selling was linked directly to individual consumers, one would assume it should be easy to compensate said consumers directly.

Wow!! You get what you deserve. Do you hear yourself whoever you are? You get what you deserve?
So being poor and getting the least expensive t.v. means you get what you deserve.
Why can't it just be about the company's unfair practice?
There is always One isn't there? It's about the people who can't afford anything else huh? So they should get everything substandard, and always come in last place for you huh? Richie Rich.

FIRE THEM?!?! As many thousands of people Trumpkinhead had stepped on the broken backs of, especially the Mom and Pop stores he has SUED INTO POVERTY, he will probably hire Samsung to run the CIA, and try to force ALL OTHER TV MAKERS to install even MORE devices like CMOS tiny cams and have Microsoft put in that HoloLens crap so every time he gives a speech to tell grammatically incorrect lies and make up words, it will be broadcast in everyone's living room in 3D Star Wars style, he's such a egomaniac

You failed civics, in school, didn't you? Trump (or any President for that matter) has absolutely not power to fire anyone from any job in the private sector. The only jobs he can terminate are those in the executive branch.

This is a pretty awful violation of ethics and invasion of privacy. The company should be made to buy back every affected device for full purchase price. And all other smart tv manufacturers should be required to be completely transparent about what they and their devices do and are capable of!

So Vizio gets a total of a $3.7 Million fine collected by two different government organizations that will squander the money away (or siphon it into private pockets), meanwhile the actual Americans who have had THEIR private data STOLEN and used to generate FAR MORE MONEY than that paltry fine, will get NOTHING. There's even strong evidence that those of us who already knew this "Smart Interactivity" was exactly what was listed in the above article, CONTINUES to collect and send data even if it's "switched off", as of the menu choice doesn't actually do anything but pacify you into believing it's actually turned off.

Where's the actual punishment for companies like this? Where's the justice for the American's who have had their data stolen. You want to SHOW a company like this the true path to redemption? You make the REFUND THE PURCHASE PRICE OF EVERY VIZIO TV PURCHASED SINCE THE ADOPTION OF THEIR "SMART INTERACTIVITY" FEATURE!

You want to come into my home and steal from me, then get caught red handed? I want my DAMN MONEY BACK for having been tricked into bringing your crap into my house.

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